Hard to argue with this proof!

[Jackie S]

On the surface, it seems like the fairest tax of all.

The "rich" pay more when they purchase more expensive items. The sales tax on a Cadillac Escalade would certainly be considerably more than on a Toyota Corolla.

Also, the sales tax would mean everybody pays. You buy, you pay.

[CuteOldGuy]

Jackie, you are exactly right.

Munch, you are good at math. Can you site, er, I mean cite to a reference that would show how that increase in revenue would reduce the deficit? At the current rate of growth, even after that tax increase, the deficit would still be over a trillion dollars. Per year.

So raise taxes on the rich, I don't care except that it won't do anything, except make the liberals feel like they've done something to help the little guy, when they haven't done anything.

Instead of trying to place the blame, why not find a system that works? Instead of tearing down the rich, how about lifting everyone up? It does me no good if some rich guy pays more in taxes, the deficit is still out of control.

[LexusLover]

Originally Posted by Doove

I got $100 that says ....

.... you voted for the current President....and another $100 that says you believe that "Obamcare" will increase jobs, reduce the jobless rate, and reduce the deficit ..... and another $100 that says that you believe that Federally subsidizing of alternative energy manufacturing businesses, like Solyndra, will solve the unemployment problems in this country.

Now, whose gonna hold the money?

As for your "spare" the "gripes" comment, it at least admits that your President is squandering, which is hardly justified by any "squandering" in the past. So, even giving your conclusions validity, attempting to justify throwing away billions, if not trillions, in tax dollars today while at the same time advocating increasing taxes to pay for it, by historical references is lame at best.

It occurs to me that solving a problem is not done by justifying an aggravation of it.

[Doove]

Originally Posted by LexusLover

.... you voted for the current President....and another $100 that says you believe that "Obamcare" will increase jobs, reduce the jobless rate, and reduce the deficit

Nope. All i believe it will do is save hundreds of thousands of lives over the next several years. Which is good enough for me. As i tell my friends, you keep voting for Presidents who lie us into trillion dollar wars, and i'll keep voting for Presidents who pass trillion dollar health care laws. And i'll feel pretty good about myself.

and another $100 that says that you believe that Federally subsidizing of alternative energy manufacturing businesses, like Solyndra, will solve the unemployment problems in this country.

Actually, i'm kind of ambivalent on the whole green-jobs thing. But with all the businesses we subsidize with our bloated defense budget (to the tune of hundreds of billions of dollars each and every year), i'm not going to get my panties in a bunch over a $500 million loan that went bad.

So, even giving your conclusions validity, attempting to justify throwing away billions, if not trillions, in tax dollars today while at the same time advocating increasing taxes to pay for it, by historical references is lame at best.

I'm not using your hypocrisy to justify anything. I'm using your hypocrisy to point out your hypocrisy. I've got other reasons for backing much of what Obama is trying to do.

I will give you credit, however, for at least being honest about what a big fat hypocrite you truly are.

[blue3122]

Originally Posted by Munchmasterman

http://www.irs.gov/pub/irs-soi/10taxstatscard.pdf
There are 323000 $ 1 mil plus returns filed.
If each only made a 1 million

323000 X $600000 (60%)= $193,800,000,000 ($193 billion not $40 bil)

And that is if each only made 1 million.

Do I advocate they pay that much in taxes? No I don't.

I advocate people learn some math. There are many numbers thrown around that should be checked.

There was a reason they made you show your work for math problems while in school.

My bad. I made an incorrect assumption that everyone knew the tax rates are MARGINAL, not Absolute. Some someone making $1,000,001 only pays 60% on the last $1 not the first Miiliion.

I advocate you learn how taxes are calculated.

Additionally, if people making > $1MM could possibly be taxed at a rate as high as 60%, this would only be 25% greater than they are already paying. Also, approximately 150,000 of the 235,000 (TY2009) made less than $2MM.

You also used 2008 numbers and as I just pointed out, there were almost 90,000 FEWER people making $1MM in 2009 than 2008.

So , if you want to use more current numbers and recalculate marginal tax revenue, then we can discuss.

[blue3122]

Originally Posted by CuteOldGuy

Jackie, you are exactly right.

Munch, you are good at math. Can you site, er, I mean cite to a reference that would show how that increase in revenue would reduce the deficit? At the current rate of growth, even after that tax increase, the deficit would still be over a trillion dollars. Per year.

So raise taxes on the rich, I don't care except that it won't do anything, except make the liberals feel like they've done something to help the little guy, when they haven't done anything.

Instead of trying to place the blame, why not find a system that works? Instead of tearing down the rich, how about lifting everyone up? It does me no good if some rich guy pays more in taxes, the deficit is still out of control.

COG, I was away for the weekend and missed the "math wiz" that is Munchmasterman. Very disappointed that the sharpies on this board missed his basic premise that the top MARGINAL rate is applied to all dollars earned. He can do arithmetic but I am doubting his ability to derive and integrate. Do not confuse arithmetic with math. Also, he chose to use numbers from 2008 rather than using the latest numbers reported. I wonder if that was to help him falsely inflate his wrong calculation??
My entire argument was trying to get anyone to define what is "fair" and to understand that only increasing significantly on the "rich" will not make a big difference on the deficit. The "rich" are essentially the 3rd+ standard deviation and a very small population. If we increased the tax rate by 1% on the first (+/-) standard deviation, we would do better simply because its a larger population.

I am still waiting for anyone to give me a definition of "fair".

[Texas Contrarian]

Originally Posted by blue3122

My bad. I made an incorrect assumption that everyone knew the tax rates are MARGINAL, not Absolute. Some someone making $1,000,001 only pays 60% on the last $1 not the first Miiliion.

I advocate you learn how taxes are calculated.

Yes, I would certainly assume that everyone in this forum (other than the poster you quoted) understands the basic rudiments of how taxes are calculated. (At least, I would certainly hope so!)

Originally Posted by blue3122

The "rich" are essentially the 3rd+ standard deviation and a very small population.

Given the basic (tax) context of this discussion, I assume you mean the 3rd standard deviation of the income strata (not net worth). I assume that (approximately) corresponds to household income greater than approx. $1 million. Is that roughly correct?

If so, that more or less corresponds to the the group targeted for the $5.6% surcharge (to be levied on dividends and capital gains as well as ordinary income, if the pushers of this plan get their way).

Originally Posted by blue3122

My entire argument was trying to get anyone to define what is "fair" and to understand that only increasing significantly on the "rich" will not make a big difference on the deficit.

My contention is that significantly increasing tax rates only on the $1 million and higher income strata will make almost no difference in the deficit. A large percentage is investment income, and affluent taxpayers have a large degree of discretion over when and how to realize income, and a significant range of options on how to reduce tax liability.

I read earlier this weekend that budget analysts forecast approximately $450 billion addition revenue (over a 10-year period) from the proposed 5.6% surcharge on high incomes. I can't possibly understand how those numbers can be considered even remotely credible.

History has shown that when big tax increases on the top bracket are enacted (at state as well as federal levels) the swiftness with which the disappearance of those (taxable) incomes occurs is astonishing.

The static analysis folks seem never to learn this.

As for the "fairness" question, I think we should move to a system such as the one envisioned by the Simpson-Bowles commission -- that is, keeping the rates relatively low while broadening the base, simplifying the code, and eliminating many exclusions and deductions.

I can assure you that no one who is wealthy, or even moderately wealthy, has any intention of paying an effective rate of 35%, let alone 39.6% or higher as desired by some.

My view is that you could get more revenue, not less, from the wealthy with a smarter, more efficient tax code -- even while keeping the "headline rate" reasonably low.

[blue3122]

I think I agree that the number is about $450 billion over 10 years. Or roughly $45 (I used $40) billion per year. Given almost $2trillion per year in deficit this year, the $40 billion seems paltry. That was my point of the original estimate.
The only thing the surcharge or whatever will do is make someone (assuming its a poor liberal) feel better about themselves. It will not create any jobs or increase GDP.

I have yet to see any liberal (and certainly not any conservative) just arbitrarily decide to pay MORE taxes because they think they are rich. It just doesn't happen. So everyone's definition of "fair" seems to be whatever hurts someone else. Such a negative idea.

[CuteOldGuy]

Blue, maybe Munch will provide a site, er, that is, a cite to his information.

[Texas Contrarian]

Originally Posted by blue3122

I think I agree that the number is about $450 billion over 10 years. Or roughly $45 (I used $40) billion per year. Given almost $2trillion per year in deficit this year, the $40 billion seems paltry. That was my point of the original estimate.

That's apparently how the CBO scores it. I can only assume from the size of the number that they're applying static analysis -- in other words, assuming that no one in the 7-figure income category will do anything differently regarding how and when to realize income, and how to structure offsets, deductions, and exclusions -- even if faced with significantly higher rates. Most people in that income range have a great deal of ability to reduce their tax burden in a variety of ways. That's particularly true if the income is from investments rather than high salaries or fees.

But even if the Treasury manages to pull in an extra $40-45 billion annually by raising taxes on the wealthy, it amounts to less than three pennies of every deficit dollar.

Originally Posted by blue3122

The only thing the surcharge or whatever will do is make someone (assuming its a poor liberal) feel better about themselves. It will not create any jobs or increase GDP.

I think that's pretty much the reason for Obama's apparent obsession with the tax-the-rich effort. He can hardly go five minutes without prattling on about how "millionaires and billionaires" need to "pay their fair share", as though that's one of the main problems affecting the economy today. But it's probably a good political strategy, and since the rest of what he's been doing isn't working very well, he probably figures he might as well ride this horse as far as he can.

Another favorite target of liberals is the capital gains tax. Getting more revenue from investors by this means is an even stickier wicket than trying to do so by raising taxes on salary and fee income.

Here is a pretty good overview of the issue:

http://www.cbo.gov/doc.cfm?index=3856&type=0

And this little graph is something of an eye-opener for some:







There's a pretty clear inverse correlation between realized gains and the top capital gains tax rate.

This helps explain why those who dream of getting hundreds of billions of dollars per year out of the wealthy are going to be sorely disappointed. It isn't going to happen.

I'm not telling you that' just or fair. That's for you to decide.

I'm simply telling you that that's the way it is.

[Laz]

Logical pragmatic analysis. What a concept that is so rarely encountered. Thanks.

[LexusLover]

Originally Posted by CaptainMidnight

....those who dream of getting hundreds of billions of dollars per year out of the wealthy are going to be sorely disappointed. It isn't going to happen.

The idea is not intended to get billions per year out of the wealthy, ...

.... it is intended to get millions of votes in the next election. And by the time those who voted "for it" figure out they have been fleeced again of their vote, the benefactor (the snake oil salesman) will be snuggly in place for another term. At least that is the plan and motivation.

Since there are more "have nots" than "haves," the number crunching is good and historically it seems to work at least for awhile to give the guy in power an edge.

[Texas Contrarian]

Originally Posted by LexusLover

The idea is not intended to get billions per year out of the wealthy, ...

.... it is intended to get millions of votes in the next election. And by the time those who voted "for it" figure out they have been fleeced again of their vote, the benefactor (the snake oil salesman) will be snuggly in place for another term. At least that is the plan and motivation.

Since there are more "have nots" than "haves," the number crunching is good and historically it seems to work at least for awhile to give the guy in power an edge.

Exactly right.

It's all about politics, not economics. Everybody who understands how the tax code works in practice knows that the proposed plans (such as the 5.6% surcharge on incomes over $1 million) aren't going to collect enough revenue to make any meaningful difference in the size of the deficit.

But if the big spenders can manage to create the illusion that they're raising taxes on the rich -- without actually bothering affluent donors too much -- they might be able to navigate smoothly through some very choppy political waters!